Virtual Reality – Niche or Reality?

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FutureSource Consulting analyst Michael Boreham told attendees at VRAR World in London today that we have finally entered an age where VR can become a commercial reality as the hardware and, more importantly, cost had reached a tipping point.

However,Boreham told the audience in his session on Virtual Reality – Niche or Reality that “content is a bit further away, we are still in experiment mode”.

He said that thanks to the recent launches in gaming VR, “games are a bit closer than TV. But there is a lot of experimentation in broadcast”.

Boreham explained that one of the major challenges to the true uptake of VR was monetisation. “It is not cheap to produce this content. Often content is quite short, so getting consumers to pay is difficult.”

“From a consumer point of view, it is more accessible”, he added. “The PS4 and others have helped here. There’s is a lot to be done to raise awareness. But is there an appetite. There is a challenge there in terms of raising appetite.”

Another factor, he told the audience, was awareness. FutureSource research found that only 7% of UK consumers had tried VR, compared with 5% and 4% respectively in Germany and France. In the US, the figure stood at 8% in US.

“Many people, while aware of VR haven’t experienced a truly great VR experience yet,” he said. However, Boreham pointed out that the number of 19 to 35-year-olds that had tried VR was double the average.

“Retail channel is key here, to raise awareness,” he added, especially with the number of consumer releases in gaming. “The console space is beginning to get really interesting,” he said.

FutureSource believes that by 2020 total content revenue will be in excess of USD$6bn worldwide. This will be split 24% to video and 76% games. The gaming VR market, though, at US$4.8bn, is still only 2.5% of the overall gaming market.

“The idea of video VR is an excellent concept, but not all of it works. You have to remember that it is not an extension of traditional TV and broadcast,” he warned. “We have to throw away 100 years of technique. VR is totally different.”

Boreham said that commercials were not a bad use case, as the short timescale “will get over the burden of having to wear a headset for a longer period of time”.

In terms of video VR content, “movies and news are a nice thought, but difficult,” he explained. “Sport is where a lot of trials are going on.”

“VR works better with smaller sports, like boxing or tennis matches, where you can get the best seat in the house. But it doesn’t work so well with big stadium sports because of an inability to zoom,” he continued.
The duration of sports is difficult too, he said. “The average time for headset wearing in sports is 10 minutes, so 45 minutes for a football match is difficult to see at the moment,” he added.

Boreham believes that in the shorter term pay-per-view will be the preferred way to monetise VR in sports, echoing the early days of satellite TV. “In the short-term, it will be PPV around key boxing matches or other sporting events that we tap into in that basis”.

He also suggested that major TV or movie franchises might also tap into VR. “This could include big studios or tie-in to gaming, as we’ve seen with Fantastic Beasts,” he explained. “It might be bundled, so it might be VR companion piece to our BluRay of a film.”

The watershed for TV will be 2018, according to FutureSource, when the technology and take-up will be large enough.

Finally, he pointed out the need to restrict the availability of good and free VR. “While this gets the message out there, we have to be ver very careful. There is a tipping point between free and paid for,” he said.